Munis on the Mend

Yes, there are still problems in the municipal-bond market. But they're less dire than many investors think.

Despite ominous headlines about municipal bonds -- given Detroit's bankruptcy and Puerto Rico's problems -- most of the $3.7 trillion market is in excellent financial condition.

States account for more than $500 billion of debt, and they remain among the strongest credits in the muni market, with 14 carrying triple-A credit ratings from Moody's Investors Service and Standard & Poor's. In contrast, only four U.S. companies have...